“It is anticipation of growth rather than growth itself that makes for lively speculation and big profits in the so-called growth stocks. Once a trend was established, either up or down, it continued to move in that direction, as though drawn by powerful magnets.â€
-Nick Darvas
Techno-Fundamental Analysis- this was a term coined by Nick Darvas back in the 60’s. In his great book, “How I Made $2 Million Dollars”, Darvas talked about identifying trends and looking for breakouts using a box-system. He was a man truly ahead of his time and his book is a must read for traders and investors looking to understand the stock market.
Recently T3 has been visited by notables such as Sam Stovall and Ralph Acampora. Both reminded us “the trend is your friendâ€â€¦- but is there more?
The trend of a company is a huge part of being on the right side of trading and investing, but that is only the technical picture. How about also trying to determine if the trend is sustainable by seeing if the fundamentals of a company support further moves in stock price appreciation?
The Magnetâ„¢ Stock Selection Process blends value, growth, and momentum. Several factors are combined to rank all companies by over a dozen metrics to find both tips of the bell curve. The ones with all of them- value, growth, and momentum going for a company- or against it- become candidates for investing in- or shorting. This becomes my “watchlistsâ€.
Although I like to find stocks in an “staircase uptrend†to trade on the pullbacks- and even more powerful trade is finding “long base breakoutsâ€. The longer the base- the higher the potential rise…When the base breakout comes on significantly higher volume- even better.
My “play of the day†this morning would be IDT Corporation (IDTE) going above $30 on volume. It has been one of the “Top Ranked Magnets†for some time. I am already there with a partial position…
*DISCLOSURE: Long IDT
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